Wednesday, 28 September 2011

EU FTT plan is a historic opportunity

Today, European Commission President José Manuel Barroso announced before the European Parliament that the Commission has adopted a proposal to set up a Financial Transaction Tax (FTT) in the European Union. Civil society organisation such as the international alliance of Catholic development agencies CIDSE call on the Finance Ministers of all EU member states to endorse the plan when they meet on 5 October 2011, making sure sufficient money is earmarked for the fight against poverty and climate change. Bernd Nilles, Secretary General of CIDSE, qualified the initiative as “an important victory for justice and solidarity” being in sight.

The Directive would establish an EU-wide tax applied on a broad range of financial transactions ranging from stocks and shares to futures and derivatives in organised markets and over-the-counter trading. Unfortunately, the Directive remains vague about what FTT revenues should be spent on. CIDSE reckons it is inconceivable that they would simply go to replenish the EU budget or national coffers.

A closer look to the draft version of the Directive reveals a mixed picture. Positive elements are:

* Establishment of an EU-wide tax applied on a broad range of financial transactions ranging from stocks and shares to futures and derivatives in organised markets and over-the-counter trading.
* It will be difficult to evade the tax, as the FTT will be applied on the basis of residence. This means that one of the parties to the transaction should be authorised to act, or be registered, or reside, or have a branch, in a member state for it to be taxable.
* The Directive could also contribute to fiscal transparency by taxing transfers even between daughter concerns within the same mother company. Such transactions are notorious for being non-transparent and under-valued. Taxes on such transactions will be calculated on the basis of the market price, making it more difficult for parties to ‘fix’ the value of a transaction to suit their own purpose.
* EU member states must implement an FTT by 2014, rather than the earlier mentioned implementation by 2018 at the latest.

Negative aspects include:

* There is no clear stipulation that the revenues of the FTT should be used to tackle poverty and climate change. While the Directive does acknowledge that the call for the FTT also stems from the desire to generate additional revenue among others for ‘specific policy purposes,’ it merely states that the tax would create a new revenue stream for the EU and its Member States.
* Trading in currency and commodities are exempt from the FTT which could reduce its revenue raising potential and have unforeseen implications on these markets.
* The Directive also recommends a low tax rate for derivatives to reduce the risk of tax avoidance, evasion and abuse. Yet, many other measures could be put in place to prevent tax evasion, especially with regards to the issue of where a party to the transaction is established.

Trade unions praise G20 Labour Ministers

The international trade union movement said Labour Ministers have set the standard for Finance Ministers and Leaders to follow as they prioritized employment and endorsed the social protection floor and rights for workers after their two day meeting in Paris, 26-27 September. ITUC General Secretary Sharan Burrow said that Labour Ministers have shown themselves to be champions of workers and the real economy where workers and employers are the actors, not bankers and rating agencies. Now the G20 Leaders and Finance Ministers must follow suit. The results of the meeting can be found in a Communiqué and the Conclusions endorsed by the Ministers.

“G20 Labour ministers have shown their Leaders the way to go. Now the Leaders must send the right instructions to their Finance Ministers, so that spending for jobs is increased while the G20 finally bring the financial markets under control as they promised to do when the crisis first broke three years ago. Complacency by G20 governments has meant no regulation of the financial sector and no action to meet the jobs crisis. We know that only workers will drive the world out of the crisis, not the bankers or the ratings agencies,” said Sharan Burrow.

The union movement also welcomed the creation of a task force on employment by the G20 Labour Ministers, and called for the group to put in place plans to build the green economy, tackle the severe crisis in youth employment, formalise informal economic activity and create sustainable jobs and businesses. OECD-TUAC General Secretary John Evans said Labour Minsters have set in place the basis for serious follow up to their work by establishing a task force on employment to be co-chaired by France and Mexico. “Its work needs to cover all the main challenges to employment at this time, from youth unemployment to the national employment targets that the G20 needs to establish. The union movement will devote maximum priority to working with the task force to help devise responses to the record levels of global unemployment,” said John Evans.

Trade unions further welcomed the Labour Ministers' endorsement of a social protection floor based on the ILO's four-part definition and workers’ rights. “When over 75 % of the world’s workers have inadequate social protection this is an economic as well as a social disaster and no more than now in times of great transitions. Developed countries built their social security systems when they were poor and coming out of the Great Depression of the 30s. These great social contracts became economic foundations as they work as economic stabilisers. When the finance ministers meet in Paris in October, they need to look at coordinated action for investment in jobs and social protection and to recognize the economic role of collective bargaining to reduce income inequality,” said Sharan Burrow.

The G20 Labour Ministers met following a tripartite dialogue with employers and unions. “A strong social dialogue with employers and unions laid the foundation for the G20 Labour Leaders discussion, which allowed workers to be put at the centre of recovery plans. Finance Ministers and Leaders need to take heed, and hear the voices of workers not just the bankers,” said Burrow.

Tuesday, 27 September 2011

G20 Labour Ministers in Paris: Addressing unemployment can boost economy

The international trade union movement called on the G20 Employment and Labour Ministers meeting in Paris on 26-27 September to step up to the plate and ensure that the G20 leaders tackle the jobs crisis as the central priority. Sharan Burrow, General Secretary, ITUC said time is running out, the G20 Finance Ministers meeting in Washington failed workers, now it up to the Labour Ministers to stand up for working people. “With unemployment come worsening social problems that will cause tension and strikes.”

According to Burrow, by addressing unemployment and putting people back to work politicians can boost the economy. “If boosting the economy is the problem G20 leaders are most worried about, jobs and social protection is the solution,” she said. John Evans, General Secretary TUAC said targeted investment in social spending such as health, infrastructure and green jobs will create jobs in the real economy. “The G20 promised to put quality employment at the heart of the recovery in their response to the financial crisis in 2008 - 2009, but their premature withdrawal of support for jobs has meant three years later we see a jobs emergency,” said Evans.

Labour and Employment Ministers are meeting for the last time before the Finance Ministers in October and the Leaders meeting in November. The ITUC, TUAC and Global Unions are calling on G20 Employment and Labour Ministers to:

* Ensure that their leaders put employment as the central government priority;
* Insist that their governments develop alternative sources of finance to provide funding for employment policies including making domestic taxation more progressive, combating tax evasion and tax havens, introducing a Financial Transactions Tax (FTT) and, for the Eurozone, “Eurobonds”;
* Set up investment in infrastructure and “green” jobs, skills development and other active labour market policies;
* Launch a G20 “Youth Pact” guaranteeing young people quality employment or education and training;
* Establish a G20 Working Group on Employment and Social Protection.

>> To read Sharan Burrow's statement to the G20 Labour Ministers click here.

>> To read the Global Unions statement to the Paris Meeting click here.

>> To read a joint ILO-OECD report on unemployment in the G20 countries click here.

Tuesday, 20 September 2011

Trade Union to IFIs and G20: Put job creation on top of agenda

Global economy is facing a surge in unemployment as record numbers of people out of work risk tipping the world into a 1930s-style downturn. G20 Governments and the International Financial Institutions (IFIs) have failed to deliver on their promises to attack joblessness and instead have turned their attention to fiscal consolidation, as money markets increasingly dictate policy. The International Trade Union Confederation (ITUC) and its Global Unions partners are calling on the IMF, World Bank and G20 Governments to assume leadership and put a halt to destructive economic policies as austerity measures contribute to a renewed economic downturn.

In the twice-annual letter sent to Ministers of Finance and Executive Directors of the IMF and World Bank, ITUC General Secretary Sharan Burrow said austerity measures threaten to create several million more job losses, making it even more unlikely that deficit targets will be reached. "We need programmes to stimulate employment through infrastructure and climate related investments and public services. The IFIs have a responsibility to protect public services vital to societies' development, such as education and health care, and support the introduction of a social protection floor in all countries," explained Burrow.

The Global Unions warned that policies of fiscal consolidation should only be considered when economic growth is self-sustaining and unemployment is falling. Instead of cutbacks, the IMF should lead a co-ordinated effort to establish a financial transactions tax to pay for job recovery programmes and meet development and climate-finance commitments. Unless the IFIs move to regulate the global financial system and create a solid foundation for millions of workers, jobs will remain unstable and we will forever be on a crisis footing, according to the trade unions.

Global Unions also called on the IFIs to
* contribute efforts to achieve climate resilience and reduce greenhouse gas emissions;
* provide supplementary assistance for developing countries affected by the increasing cost of food;
* reverse policies that increase gender inequalities.

In a targeted message to the IMF, Global Unions called on it to stop promoting labour market de-regulation. The ILO's expertise on working conditions should guide policy instead. The World Bank needs to ensure consistency within the World Bank Group in support of core labour standards and to put in place effective safeguards to ensure compliance.

* The ITUC, Global Union Federations and TUAC statement to the 2011 Annual Meetings of the IMF and World Bank from 23-25 September in Washington DC can be downloaded >>> here.

Thursday, 1 September 2011

Oil transparency must underpin negotiations over Libya

Transparency of Libya’s oil wealth must be a key priority of Thursday’s negotiations over the country’s future, said Global Witness today. The meeting, which is to be co-chaired by UK Prime Minister David Cameron and France’s President, Nicholas Sarkozy, could mark a crucial step along the path to future peace and prosperity in Libya. With the UN in the process of ‘unfreezing’ $1.5bn of Libyan funds to the NTC, the National Transition Council, and with companies queuing up to do business in Libya, how the NTC and their partners manage Libya’s finances will set a precedent for decades to come.

"With billions of dollars now being unfrozen and returned to Libyans, the meeting on Thursday offers a great opportunity to put in place practices that will ensure Libya's wealth is managed well for the long-term," said Brendan O’Donnell, Senior Campaigner at Global Witness. “As hosts of the meeting on Thursday, the UK and France must ensure that the transparent management of Libya’s oil wealth is at the top of the agenda.” Given Libya’s recent past, the management of public wealth will be crucial to public perceptions of the trustworthiness of the transitional government. An important first step would be to publish all Gaddafi’s oil contracts, setting a precedent of openness from the outset.

Concrete transparency provisions should be written into the transitional constitution to ensure the just exploitation of Libya's natural resources. These should require the public disclosure of how Libya manages its oil sector and disclosure of all revenues associated with it. Public finances including unfrozen assets, funds raised against frozen assets, resource trading and aid should be made open to public scrutiny. The terms of existing oil contracts should also be disclosed and details of agreements made by the NTC with governments and companies involving sovereign funds or the exchange of cash, crude oil or 'IOUs' secured against frozen assets should be made public and open to scrutiny by Libyan civil society and NGOs. This is particularly important as the UN, EU and others start to unfreeze and return billions of dollars of Libyan assets held overseas.

All funds should be released through a transparent mechanism such as a strengthened Temporary Finance Mechanism which was set-up by the NTC and the Libya Contact Group to manage aid flows. Governments should assist the NTC to track down and recover the funds that Gaddafi and his cronies looted from the state, and punish those banks that accepted this money. Prevent new oil concessions should be brokered until an elected government is in place. Any deals at this time could raise concerns within Libya that international support for the NTC is driven by a desire for access to oil rather than for the benefit of the Libyan people. The NTC is likely to have to honour Qaddafi-era contracts in order to get oil revenues flowing. But no new deals for the exploration or exploitation of oil fields should be considered until an elected government can review existing rules and laws to ensure robust transparency and accountability, The Libya contact group should use its influence to ensure that companies in their markets do not attempt to broker deals at this time.

* In July this year Global Witness published a leaked document detailing $65bn worth of investments held by the Libyan sovereign wealth fund, the Libyan Investment Authority (see According to the document HSBC, Société Générale and Goldman Sachs were among the key western bankers for Colonel Gaddafi’s regime.